The Federal Communications Commission (FCC) is scheduled to vote today (0) on a proposal (1) to extend its Lifeline program to include broadband access. If successful, the 13 million households that currently receive $9.25 per month to help pay their telephone bills will be allowed instead to spend that subsidy on broadband service. To fund this expansion, the agency is reportedly seeking a 50 percent increase in the Lifeline budget, to $2.25 billion.
Expanding Lifeline will not close the digital divide
The agency is absolutely right that more should be done to reduce the broadband gap for low-income Americans. But it is unlikely that simply extending Lifeline will help do so. That’s the argument I put forth in my most recent white paper (2), published yesterday by AEI. Titled “To narrow the digital divide, the FCC should not simply extend Lifeline to broadband,” it argues that Lifeline needs revolutionary, not just evolutionary, change:
The agency proposes to spend $2.25 billion annually to transform a Reagan-era telephone assistance program into a broadband subsidy. Yet when prompted by the GAO, the agency admitted it has no proof that the existing subsidy of $9.25 monthly per household meaningfully increases telephone penetration rates, and independent academic studies suggest that as much as 88 percent of program funding is wasted each year.
Now the FCC proposes to extend the same monthly subsidy to broadband access, but it offers no plan to limit the proposed subsidy to households that otherwise would not purchase Internet access and no proof that an extra $9.25 each month would entice those households to buy Internet access. Its definition of qualifying broadband service is inconsistent with earlier agency rulings, and its desire to phase out telephone support is unnecessarily paternalistic. The proposal would increase Lifeline expenditures by 50 percent without addressing serious structural flaws in the existing program, such as runaway costs and an unsustainable funding mechanism. Even if it passes, a broadband Lifeline program does nothing to address other, potentially more significant barriers to Internet adoption, such as low interest in buying household Internet access and the high cost of computers. The FCC’s proposal amounts to a $2.25 billion annual bet that giving a little bit of money to millions of low-income households will somehow solve the broadband gap.
The FCC is writing policy in the dark
One of the biggest difficulties is that the FCC has not studied in depth the drivers of the low-income broadband gap or understood how to best spend its subsidy dollars. Without such a study, we cannot determine whether, for example, it’s better to give $9 per month to 13 million households, as the FCC suggests, or $45 per month to 2.6 million households.
The paper outlines a far different approach to solving the broadband gap, one that is more likely to achieve the goal of bringing more low-income households online:
Congress should adopt a comprehensive approach to closing the digital divide that encompasses digital literacy outreach programs and low-cost equipment plans as well as monthly service plan subsidies. The subsidy should be data-driven, and rather than arbitrarily choosing minimum download speeds, the program should define a minimum set of activities that recipients should be able to do online, and target plans that will allow recipients to do those things. Consistent with President Obama’s ConnectALL initiative, this subsidy should be direct and portable: recipients should receive the subsidy directly and be able to choose how best to use this credit toward the bundle of telecommunications services that best fit their household needs.
The program should be placed on a fixed budget subject to congressional control and oversight, to increase incentives to deploy funds efficiently and reduce opportunities for fraud and waste. Finally, Congress should consider moving the program to another agency, such as the Department of Health and Human Services, that has a better understanding of poverty-related issues.
You can read the paper in its entirety here (3).